Question

Calculate Lead Time

Orion Devices Inc. is considering a new just-in-time product cell. The present manufacturing approach produces a product in four separate steps. The production batch sizes are 70 units. The process time for each step is as follows:

Process Step 1	4	minutes
Process Step 2	7	minutes
Process Step 3	9	minutes
Process Step 4	5	minutes

The time required to move each batch between steps is 18 minutes. In addition, the time to move raw materials to Process Step 1 is also 18 minutes, and the time to move completed units from Process Step 4 to finished goods inventory is 18 minutes.

The new just-in-time layout will allow the company to reduce the batch sizes from 70 units to 4 units. The time required to move each batch between steps and the inventory locations will be reduced to 3 minutes. The processing time in each step will stay the same.

Determine the value-added, non-value-added, total lead times, and the value-added ratio under the present and proposed production approaches. If required, round percentages to one decimal place.

	Present Approach		Proposed Approach
Value-added time		min		min
Non-value-added time		min		min
Total lead time		min		min
Value-added ratio (as a percent)		%		%

Answer 1

Value added time are those time which adds value to production and manufacturing and are essential and can be easily tracked. While, non-value added time cannot be easily tracked.

Non-value added time = {Value added time X (batch size -1)} + move time

value added time	Present	Proposed
Process step 1	4	4
Process step 2	7	7
Process step 3	9	9
Process step 4	5	5
Total value added time	25	25
Non-value added time	Present	Proposed
Introduction time	18	3
From process 1 to 2	18	3
From process 2 to 3	18	3
From process 4 to 5	18	3
Transfer of finished goods	18	3
Move time	90	15
Non value added time = {Value added time X (batch size -1)} + move time
Present = {25 X (70-1)} + 90	1815
Proposed = {25X(4-1)}+15		90
Total lead time (1815+25) and (25+90)	1840	115
Value added ratio = value added/lead time	1.4%	21.7%